I made the following proposal at a Jobs Forum event in Cork earlier in the year specifically relating to this issue.
On the way in I spoke to an accountant who had recently been asked by a guy to calculate what income he would need if he were to go back to work in order to replace all his benefits. The figure was €55,000. Madness.
Anyway, I subsequently forwarded it to the 3 ministers there on the day.
It's a bit long-winded
but I cut it as short as I could.
Dear Minister,
You may remember I made a proposal from the floor regarding the separation of unemployment benefit from all other social welfare benefits at the recent event in The Silver Springs Hotel in Cork.
You may also recall I had spoken to an accountant who had calculated that a client of his would need to earn a gross income of €55000 to replace all his social welfare entitlements.
This is a barrier to employment for both employers and those who would wish to work.
Proposal;
Those who are unemployed receive unemployment benefit as currently.
All other benefits to be means tested but available to every eligible citizen, whether working or unemployed.
The Benefits;
Does not need to cost the state anything.
If there is a benefit that costs the state €100m e.g. 100,000 claimants at €1000 each currently, cap that benefit at €100m but distribute it equitably.
If the beneficiary numbers double, either halve the benefit or raise the earnings threshold to bring the number entitled to 100,000 or a balance of the two.
Income generating.
Reduces the appeal of the black economy.
More tax compliance.
More tax income.
If an income tax hike becomes inevitable, it would buffer the effect on the lowest paid, therefore making the additional tax more equitable, more acceptable.
Easy to administer.
Clear and simple.
Removes a barrier to employment.
The guy in the example above will probably never work again because;
He can’t afford to.
A potential employer can’t afford him.
If he isn’t a sit at home type and has ability and ambition, he will be tempted into the black economy.
Improves Ireland’s competitiveness;
Reasons as above.
You will be helping employers to employ.
Other benefits;
Equitable.
The numbers gaining will outnumber those losing.
Those losing should not be forced into poverty. It will only hit houses with significant income from social welfare.
The impact on those who will gain may be enormous. It’s likely to be the difference between balancing the weekly budget and not. They will remember.
The challenges;
Increased number of claimants.
As above. Cap the total cost of each benefit but distribute more equitably.
Administration in setting up.
What the Croke Park Agreement is meant to deliver.
Lack of compatibility between the systems of the Revenue and the Dept. of Social Protection.
Should be addressed anyway!
In the meantime, make the applications self-assessment based, on-line with significant penalties for misrepresentation.
This information can be randomly checked by the Revenue and the Dept. of Social Protection.
Announce in Budget 2012. Applications by end June 2013. Actuarial calculations June to Nov 2013. Details in Budget 2013. Changeover Jan 2014.
I’m sure there are more challenges that I am oblivious to. I do, however, think the benefits warrant the proposal receiving some consideration.
you nailed it
